I’m glad New York City is about to start charging vehicles for crowding the streets of Manhattan, and I say that as a New Jersey resident — a member of the bridge and tunnel crowd — who will be paying a fat toll whenever I drive into the congestion zone in Manhattan.
I take a bus to work in the city via the Lincoln Tunnel, but I also drive into Manhattan at times, mostly on weekends. So I’m one of the perpetrators of vehicular congestion. I get why it’s a bad thing, and I get why charging for entering the zone will achieve multiple goals.
It will make Manhattan’s streets less jammed, which will make driving in the city less agonizing. Buses will become more popular because they will move faster. Ambulances and fire trucks will get to their destinations sooner. There will be less air pollution.
And the money raised from the congestion charges — estimated at about $1 billion a year — will be enough to cover interest and principal payments on about $15 billion of capital improvements to the city’s subways and buses and regional train lines.
New York is the first city in the United States to create a congestion zone, so its experience will be watched closely in other cities with serious vehicular congestion. According to Inrix, a data collector, New York is only the fourth-worst North American city in terms of traffic delays — not as bad as Chicago, Boston or Toronto but worse than Mexico’s Monterrey, Philadelphia, Miami, San Francisco, Los Angeles and Washington. (Although the M.T.A. says New York is the worst in the country.)
Over the New Year’s weekend, I interviewed Kathryn Wylde, a mover and shaker in New York who is the president and chief executive of the Partnership for New York City, a nonprofit organization representing many of the city’s biggest employers. She is a member of a blue-ribbon panel, the Metropolitan Transit Authority’s Traffic Mobility Review Board, that in November issued recommendations for congestion pricing. (The M.T.A. board will vote on the plan after public hearings scheduled for Feb. 29 to March 4.)
Empty streets are a sign of trouble in a city, Wylde said, but ”there is a point at which traffic goes from being a healthy thing to being a great cost.” New York, she said, is past that point.
Wylde said she’s heard a lot of complaints about the congestion plan and warnings that it won’t work. She said she wasn’t worried: “In every city that’s imposed congestion pricing there’s been great opposition before the fact. And a year after it’s implemented, people say, ‘Why didn’t we do this long ago?’”
In Stockholm there was opposition to a test of congestion pricing that began in 2006. But after it succeeded in cutting traffic in the central city by 22 percent, voters made the system permanent in a referendum later that year.
If the Traffic Mobility Review Board proposal is adopted, the congestion charge will apply to vehicles entering Manhattan south of 60th Street, with the main exception of vehicles that stay on the F.D.R. Drive along the East River and the West Side Highway along the Hudson River. For vehicles using E-ZPass, it will be $15 for cars and $24 or $36 for trucks, depending on their size. It will be imposed once a day, regardless of how many times the vehicle enters the congestion zone. Commuter buses will be exempted. Taxis and for-hire vehicles (which include limousines and Ubers) will be exempt from the daily toll but instead will pay a per-ride congestion charge.
The full tolls will be charged from 5 a.m. to 9 p.m. on weekdays and from 9 a.m. to 9 p.m. on weekends under the panel’s proposal. The plan calls for toll rates to be 75 percent lower in off hours.
Let’s step back from the details. The basic idea of congestion pricing goes back to some giants of economics, including Arthur Pigou of England and William Vickrey of the United States. The concept is simply that by driving into a congested area, you are harming the other people who have to deal with that congestion and you should be charged for your negative externality. It’s hard to argue with that.
A city’s streets, parking spaces and sidewalks are the municipal government’s most important assets, and it makes perfect sense to charge for them, both to make sure that they are used by the people who value them most highly and to raise money to cover the cost of their construction and upkeep, Todd Litman, the executive director of the Victoria Transport Policy Institute, a consulting firm in Victoria, British Columbia, told me.
“Motorists all want free roads and free parking,” Litman said. “But they’re never really free. The choice is between paying for them directly and paying for them indirectly. Paying for them directly is the best way to reduce congestion. If you oppose that, you’re saying you support congestion and parking problems.”
New York’s plan isn’t perfect from the perspective of economic theory. A first best solution, in economists’ lingo, would precisely match the toll to the social cost in every case. It would vary minute by minute and street by street, depending on local conditions. People who drove a lot once they were inside the zone would pay more than ones who simply parked. Also, cars that pollute more would pay more.
A first best plan would also get rid of the sharp boundaries between inside the zone (expensive) and outside it (free). While prices would be highest in Manhattan below 60th Street, there would be tolls for driving in other parts of Manhattan, other boroughs and the suburbs — indeed, everywhere that congestion is a problem.
Two problems with the first best solution: It would take a big investment in technology, and it would raise concerns about invasion of privacy. That issue has come up in Singapore, which is switching to a system that will allow for distance-based road pricing. (The government says charging by distance traveled is “still several years away.”)
New York opted for a simpler system that is easier to carry out and provides rough justice, said Matthew Tarduno, an assistant professor of economics at the University of Illinois, Chicago. “I think New York’s plan is great,” said Tarduno, who has studied congestion pricing. “I don’t see any gaping hole.”
One advantage Manhattan has — and a city such as San Francisco lacks — is that relatively few vehicles simply pass through Manhattan on the way to somewhere else. They mostly enter Manhattan to be in Manhattan. The reason this is an advantage is that the toll will cause drivers to make fewer trips, not just take longer trips to avoid the congestion zone, as might be the case in other cities where their goal wasn’t to reach the city center itself.
The standard rap against congestion pricing is that it will harm the poor and working class. New York’s blue-ribbon panel dealt with that in part by proposing a 50 percent discount — open to people with household incomes under $50,000 — on the daytime auto toll after the first 10 trips made by a vehicle in a calendar month. That’s likely to be a small number of people, since the panel estimates that only 1 percent of people who drive to work in the congestion zone have incomes that low. (Yes, Manhattan is kind of different.)
More important, lower-income workers will benefit from improvements to public transportation, especially the subway, which they use extensively. On average, richer people drive into Manhattan more than poorer people do.
Devansh Jalota, a doctoral candidate in computational and mathematical engineering at Stanford, told me about a paper he wrote with professors and colleagues at Stanford and the Massachusetts Institute of Technology that shows how redistributing the revenue raised by congestion pricing by refunding the collected money into the right hands can reduce traffic congestion without worsening economic equity: Poorer drivers benefit from the money directly, while their richer counterparts benefit through reduced travel time and inconvenience. The idea is to make everyone as well off or better off than they were before the plan was adopted, which increases political acceptability.
New York, of course, isn’t redistributing the revenue in this way. It’s putting it into public transit. That’s not a bad option, either, Jalota said. It may be more politically acceptable than redistributing it to drivers.
As a New Jerseyite, I do have one gripe about the blue-ribbon panel’s plan, which is that none of the money raised is to go toward improvements in public transit in New Jersey, even though people from New Jersey will be paying a lot of the $1 billion. When I asked Wylde about that, she said commuters and visitors from New Jersey will benefit from the improvements to the city’s subways and buses. Which is true, but come on, throw us a bone.
On the whole, I see congestion pricing as the wave of the future. Prices ration supply and prevent shortages. We pay more for hotels and airline seats when demand is higher. Why not roads?
Elsewhere: Protecting Children in Alaska
Children in Alaska whose parents receive more money from the Alaska Permanent Fund Dividend are less likely to be maltreated, research shows. An additional $1,000 paid to families in the first few months of a child’s life reduces by 2 percentage points the likelihood that a child is referred to child protective services by age 3, which is a 10 percent reduction, according to a working paper by Lindsey Bullinger of Georgia Institute of Technology, Analisa Packham of Vanderbilt University and Kerri Raissian of the University of Connecticut. The payments from the permanent fund, which are based on oil royalties, go to all residents equally, regardless of income, so they amount to a kind of universal basic income.
Quote of the Day
“A developing economy that succeeds in permanently increasing its saving (investment) rate will have a higher level of output than if it had not done so, and must therefore grow faster for a while. But it will not achieve a permanently higher rate of growth of output.”
— Robert Solow, lecture upon receiving the Nobel Memorial Prize in Economic Sciences (Dec. 8, 1987)